Correlation Between Far East and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Far East and KINGBOARD CHEMICAL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Far East and KINGBOARD CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far East Orchard and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Far East and KINGBOARD CHEMICAL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Far East with a short position of KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far East and KINGBOARD CHEMICAL.
Diversification Opportunities for Far East and KINGBOARD CHEMICAL
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Far and KINGBOARD is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Far East Orchard and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL and Far East is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Far East Orchard are associated (or correlated) with KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Far East i.e., Far East and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between Far East and KINGBOARD CHEMICAL
Assuming the 90 days horizon Far East is expected to generate 6.05 times less return on investment than KINGBOARD CHEMICAL. But when comparing it to its historical volatility, Far East Orchard is 3.82 times less risky than KINGBOARD CHEMICAL. It trades about 0.05 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 144.00 in KINGBOARD CHEMICAL on November 9, 2024 and sell it today you would earn a total of 106.00 from holding KINGBOARD CHEMICAL or generate 73.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Far East Orchard vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| Far East Orchard |
| KINGBOARD CHEMICAL |
Far East and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far East and KINGBOARD CHEMICAL
The main advantage of trading using opposite Far East and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far East position performs unexpectedly, KINGBOARD CHEMICAL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| Far East vs. Gruppo Mutuionline SpA | Far East vs. THRACE PLASTICS | Far East vs. Materialise NV | Far East vs. Sumitomo Rubber Industries |
| KINGBOARD CHEMICAL vs. SILICON LABORATOR | KINGBOARD CHEMICAL vs. PKSHA TECHNOLOGY INC | KINGBOARD CHEMICAL vs. Casio Computer CoLtd | KINGBOARD CHEMICAL vs. X FAB Silicon Foundries |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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